Offer sheets are all the rage
Offer sheets to restricted free agents have been the talk of the league for the last few months. To say the offer sheet horse has been beaten to death would be an understatement. At this point, the horse is so dead that all of us participating in this dialogue are brutalizing its internal organs.
We all know the nature of the offer sheet discussion. Agents and players want to use the threat of it to have leverage over teams. There’s also the oft-noted aspect of its morality: should general managers even be in the business of handing out offer sheets? The obvious answer to that is yes, because you’re probably a bad general manager if you aren’t exploring an avenue that is completely within the rules of the CBA because of some archaic code of ethics. This leads me to the part of the offer sheet discourse that I wish was talked about more often: are offer sheets a market inefficiency? As a result of offer sheets being discouraged, we don’t have much data on what the value is of signing a restricted free agent and subsequently giving up draft picks. Hopefully this is the offseason where we can find out.
First, let’s set aside the salary cap and potential compensation and just look at restricted and unrestricted free agency in a vacuum. Restricted free agents are infinitely more valuable. This year is an anomaly because the top free agent available (Artemi Panarin) is only 27 but more often than not, UFA’s are players that are either at the end of their primes or even a tick past it. Generally speaking, top end UFA’s are being paid for past production and maybe you can hope for two or three years of high-level performance. RFA’s, however, are players who are likely being paid for future performance. Ranging from their early-mid 20’s, the players in this group are either not quite at their prime or right smack in the middle of it. Of course, restricted free agency doesn’t exist in a vacuum and the finances and draft pick compensation are very real variables. But they might not be as big of barriers as they appear.
Teams have to overpay in order to sign RFA’s, that’s just a fact. The player’s original team would certainly match if the price was in a “reasonable” range. A guy who might be worth $8 million might get paid $12 million for a team to pry him away from his original club. As the price goes up so does the draft compensation, which can reach four (!!!) first-round picks. This seems excessive to be sure, but there are always a few teams who can pay this price on both fronts. The teams that can handle this may be rewarded with the extremely valuable commodity of a free agent who is still ascending.
The Colorado Avalanche are the best example of a current team who fit this mold. The Avs have oodles of cap space, owing mainly to the absolute steal of a contract they have Nathan MacKinnon on. Additionally, they have arguably the deepest prospect pool in the game, with guys up front like Martin Kaut and Shane Bowers and a trio of blue-chip defenseman in Cale Makar, Connor Timmins and Bowen Byram. It’s still a heavy price to pay, but Colorado could certainly absorb a $12 million cap hit to take on Brayden Point or Mitch Marner, and have the prospect pipeline where giving up four first-rounders wouldn’t be crippling to their farm system. The upside to having a top-end forward for the Avalanche who is still likely getting better would be tremendous. A future with MacKinnon, Point and Bowers up the middle would be absolutely terrifying, as would a first line with Marner on MacKinnon’s wing and a second line led by Mikko Rantanen (himself a restricted free agent).
Colorado presents a formula of sorts for teams that could be looking to exploit restricted free agency: if you have the cap space and feel good about your prospect pool it could be worth it. Even teams that feel their prospect pool could be better, it’s still something worth looking into. We know by now that draft picks are lottery tickets, even first-round ones. You could be looking at your franchise cornerstone, but there’s always Kyle Beach-type of guys lurking. Think about how in 2014 John Quennville was a first-round pick but Brayden Point was a third-rounder. There are guys to be had at all levels of the draft. You could be potentially trading John Quenville four times to get an elite player, with the opportunity to still have your Brayden Points of the world. So if you feel like there’s a guy who is worth four firsts, that is definitely something that should be strongly considered.
Offer sheets should be seen as the latest evolution of weaponizing cap space. This is where teams can get an edge over a Toronto or Tampa, by poaching their young players (for a nominal fee of course) or forcing them into bloated contracts (Philadelphia was ahead of the curve on this on their Shea Weber offer sheet a few years ago). I hope this is the offseason where some enterprising general manager takes a gamble on the high cost of an RFA and gives the offer sheet experiment the test it has never received but truly deserves.